Grain Ecosystem

The recording of our recent webinar, Biochar in Bloom: Lessons from Okaw Valley Orchard, is now available. 

Last week’s Biochar in Bloom webinar spotlighted Mike Mitchell, owner of Okaw Valley Orchard and founder of Mike’s Mighty Micros, who shared his firsthand experience with integrating biochar into orchard management. Hosted by Grain Ecosystem co-founder Jason Dodier, the conversation explored how traditional practices and regenerative tools can work together to restore soil health, improve resilience, and strengthen local food systems.  

Okaw Valley Orchard is a fourth-generation family-run orchard in Sullivan, Illinois, home to more than 1,500 fruit trees and 27 varieties of apples, peaches, plums, and pears. Known for its cider, donuts, and “you-pick” experiences, the orchard is also becoming a living laboratory for soil health innovation. 

When Mike and his wife took over the orchard, they inherited both a rich family legacy and some aging trees that weren’t producing as they used to. After replanting, Mike noticed the new trees weren’t growing as expected. Despite consulting universities and other orchards, he couldn’t find a clear answer, until a chance encounter with a customer, a retired farmer, connected him to Brian, a regenerative agronomist who would become his mentor and collaborator.  

The turning point: a micronutrient blend that brought trees back to life 

Brian introduced Mike to the importance of trace minerals and micronutrients, sharing a custom foliar blend he had developed through years of research. The results were immediate: “They burst to life,” Mike recalled. All the trees “put on new growth, turned green, and started blooming. And it wasn’t just a couple of them; it was all the trees that I planted. All 200 trees did the same thing.” 

That experience became the foundation of Mike’s Mighty Micros, a brand and philosophy rooted in the idea that when you feed the soil, the soil feeds the plant. 

The three ingredients for thriving soil 

 When asked what he now considers essential for healthy soil, Mike didn’t hesitate: “Biochar, worm castings, and compost.” 

After learning how decades of tree growth had depleted the orchard’s soil, Mike realized that fertilizer alone couldn’t restore what was missing. By combining biochar with organic matter and microbial life, he began rebuilding soil structure and fertility from the ground up. 

As Mike explained during the webinar: “Biochar keeps the ground less compacted, more aerated, more ideal for worms to be in. So they’re in there doing their thing, digging tunnels, pooping in them, and fertilizing for you for free.”  

Biochar, he explained, acts as a soil amendment, not a replacement. It provides structure, porosity, and habitat for microorganisms. Compost and worm castings supply nutrients and active biology. Together, they create a living soil system that improves water retention, nutrient cycling, and long-term fertility. 

The benefits have been visible and measurable. Even during drought conditions, Mike’s orchard has shown clear improvements in resilience and water retention. “Right now, we’re in a drought here in central Illinois. We’re twelve inches behind on rain,” he said. “The ground is like concrete. But under my trees, where I’ve got biochar and mulch, it’s holding moisture. I haven’t watered this year, and the new trees I planted this spring are still green.” 

He noted that his trees now stay green longer into the season: “My apple trees will stay green until the end of November. The other trees drop their leaves, but the apple trees under this system hold on. They stay alive longer.” 

Beyond resilience, Mike highlighted something less often measured but instantly recognizable: flavor. “Once you’ve had a fruit or vegetable that’s fully genetically expressed — with every mineral it needs — the flavor is second to none. When you bite into one of my apples, the flavor hits you. It’s juicy. It’s all there.”  

Biochar In Bloom Photos

Lessons for farmers and biochar producers 

Beyond the orchard, Mike’s experience offers valuable guidance for both farmers using biochar and producers supplying it:  

A family legacy, rooted in regeneration 

Today, Okaw Valley Orchard continues to be a thriving family business, with Mike’s children and grandchildren all involved. What started as an effort to save a few struggling trees has grown into a model for how small farms can embrace circular, regenerative systems, proving that soil innovation can strengthen both local economies and community connections. 

 “Healthy soil, healthy plants, healthy people. That’s the cycle we’re working to protect,” Mike shared. 

Mark your calendars! Our next webinar is coming up on November 6 with a new topic and guest. Stay tuned. 

How a fourth-generation orchardist is using biochar, compost, and worm castings to rebuild his soil, and grow stronger, more resilient trees. 

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<p></p><p>The recording of our recent webinar, Biochar in Bloom: Lessons from Okaw Valley Orchard, is now available. </p><p><iframe width="1905" height="748" src="https://www.youtube.com/embed/0Ioxo8W65ww" title="Biochar in Bloom: Lessons from Okaw Valley Orchard | Webinar with Mike Mitchell" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe></p><p><a href="https://youtu.be/0Ioxo8W65ww" target="_blank" rel="noopener noreferrer"><em>If you can’t see the video above, click here to watch the full recording directly on YouTube. </em></a></p><p>Last week’s Biochar in Bloom webinar spotlighted Mike Mitchell, owner of Okaw Valley Orchard and founder of Mike’s Mighty Micros, who shared his firsthand experience with integrating biochar into orchard management. Hosted by Grain Ecosystem co-founder Jason Dodier, the conversation explored how traditional practices and regenerative tools can work together to restore soil health, improve resilience, and strengthen local food systems.  </p><h2>From family legacy to soil innovation </h2><p>Okaw Valley Orchard is a fourth-generation family-run orchard in Sullivan, Illinois, home to more than 1,500 fruit trees and 27 varieties of apples, peaches, plums, and pears. Known for its cider, donuts, and “you-pick” experiences, the orchard is also becoming a living laboratory for soil health innovation. </p><p>When Mike and his wife took over the orchard, they inherited both a rich family legacy and some aging trees that weren’t producing as they used to. After replanting, Mike noticed the new trees weren’t growing as expected. Despite consulting universities and other orchards, he couldn’t find a clear answer, until a chance encounter with a customer, a retired farmer, connected him to Brian, a regenerative agronomist who would become his mentor and collaborator.  </p><h2>The turning point: a micronutrient blend that brought trees back to life </h2><p>Brian introduced Mike to the importance of trace minerals and micronutrients, sharing a custom foliar blend he had developed through years of research. The results were immediate: “They burst to life,” Mike recalled. All the trees “put on new growth, turned green, and started blooming. And it wasn’t just a couple of them; it was all the trees that I planted. All 200 trees did the same thing.” </p><p>That experience became the foundation of Mike’s Mighty Micros, a brand and philosophy rooted in the idea that when you feed the soil, the soil feeds the plant. </p><h2>The three ingredients for thriving soil </h2><p> When asked what he now considers essential for healthy soil, Mike didn’t hesitate: “Biochar, worm castings, and compost.” </p><p>After learning how decades of tree growth had depleted the orchard’s soil, Mike realized that fertilizer alone couldn’t restore what was missing. By combining biochar with organic matter and microbial life, he began rebuilding soil structure and fertility from the ground up. </p><p>As Mike explained during the webinar: “Biochar keeps the ground less compacted, more aerated, more ideal for worms to be in. So they’re in there doing their thing, digging tunnels, pooping in them, and fertilizing for you for free.”  </p><p>Biochar, he explained, acts as a soil amendment, not a replacement. It provides structure, porosity, and habitat for microorganisms. Compost and worm castings supply nutrients and active biology. Together, they create a living soil system that improves water retention, nutrient cycling, and long-term fertility. </p><h2>Real results in the orchard </h2><p>The benefits have been visible and measurable. Even during drought conditions, Mike’s orchard has shown clear improvements in resilience and water retention. “Right now, we’re in a drought here in central Illinois. We’re twelve inches behind on rain,” he said. “The ground is like concrete. But under my trees, where I’ve got biochar and mulch, it’s holding moisture. I haven’t watered this year, and the new trees I planted this spring are still green.” </p><p>He noted that his trees now stay green longer into the season: “My apple trees will stay green until the end of November. The other trees drop their leaves, but the apple trees under this system hold on. They stay alive longer.” </p><p>Beyond resilience, Mike highlighted something less often measured but instantly recognizable: flavor. “Once you’ve had a fruit or vegetable that’s fully genetically expressed — with every mineral it needs — the flavor is second to none. When you bite into one of my apples, the flavor hits you. It’s juicy. It’s all there.”  </p><img src="/media/BiocharInBloomPhotos.jpg" alt="BiocharInBloomPhotos.jpg" width="900"  height="506"/><p></p><h2>Lessons for farmers and biochar producers </h2><p>Beyond the orchard, Mike’s experience offers valuable guidance for both farmers using biochar and producers supplying it:  </p><ul class="bullet"><li value=1>Not all biochar is created equal. Feedstock matters. Manure-based biochar tends to offer higher nutrient content and better results than wood-only char.  </li></ul><ul class="bullet"><li value=1>Mix, don’t mound. Biochar must be incorporated into the soil, not concentrated in planting holes. </li></ul><ul class="bullet"><li value=1>Start small but consistent. Mike recommends 1,000–2,000 lbs per acre depending on soil type, integrated with compost and organic material. </li></ul><ul class="bullet"><li value=1>Think long term. “You get about three years of nutrient value from manure-based biochar alone,” he explained. “But when you combine it with microbial life, that benefit extends much further.” </li></ul><h2>A family legacy, rooted in regeneration </h2><p>Today, Okaw Valley Orchard continues to be a thriving family business, with Mike’s children and grandchildren all involved. What started as an effort to save a few struggling trees has grown into a model for how small farms can embrace circular, regenerative systems, proving that soil innovation can strengthen both local economies and community connections. </p><p> “Healthy soil, healthy plants, healthy people. That’s the cycle we’re working to protect,” Mike shared. </p><p>--- </p><p>Mark your calendars! Our next webinar is coming up on November 6 with a new topic and guest. Stay tuned. </p><h2>Related content: Grain Webinars </h2><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/6883a7802492b585355e77ee" target="_blank" rel="noopener noreferrer">The Green Bridge: Non-Traditional Finance for Biochar</a></li><li value=2><a href="https://grainecosystem.com/knowledge-hub/articles/67b75ae223e6759660f119ad" target="_blank" rel="noopener noreferrer">Advancing CDR: From Start-Up to Scale-Up</a></li><li value=3><a href="https://grainecosystem.com/knowledge-hub/articles/6751f73e593a512d338ee036" target="_blank" rel="noopener noreferrer">Building Biochar Markets for Value & Scale: Webinar Recap</a></li><li value=4><a href="https://grainecosystem.com/knowledge-hub/articles/67092f5e79685344119a953f" target="_blank" rel="noopener noreferrer">Dirt to Dollars. Unearthing the Science of Sustainable Investment</a></li></ul>

Biochar in Bloom: Lessons from Okaw Valley Orchard 

Securing a consistent and high-quality feedstock supply is one of the most critical aspects of launching a successful biochar project. Here’s how to assess your feedstock options, approach providers, and build agreements that set your project up for scale. 

Some projects already have secured feedstock, like a sugar mill looking for solutions to manage its excess bagasse. Others, however, need to form partnerships with external suppliers. We’ll focus on the specifics of this latter approach. 

Before starting your project or reaching out to potential providers, you’ll need to understand what qualifies as acceptable feedstock. In short: it must be biogenic, waste-derived, and clean. That means it needs to come from a biological source, be considered a residual material rather than a primary product, and be free from contaminants like plastic, chemicals, or paint. 

These standards aren’t just technicalities: they’re essential for emissions control, regulatory compliance, and downstream carbon certification. 

In these previous articles you can read about eligible feedstocks for each Standard and how to prove its Sustainable: 

Where to Find Viable Feedstock Providers 

The most reliable feedstock often comes from existing, large-scale operations that already generate biogenic waste as a byproduct of their core business. Sawmills, sugar mills, municipal green waste programs, and tree services are prime examples. They produce a steady stream of materials —like wood chips, bark fines, and bagasse— that would otherwise be discarded or underutilized. 

Tapping into these supply chains allows you to leverage their existing logistics infrastructure. Ideally, your processing facility should be located as close as possible to theirs. This not only reduces transport costs, emissions and complexity, but makes your value proposition stronger, because you’re offering a solution for their waste, without requiring them to reinvent operations. 

Not surprisingly, feedstock composition, the biochar system input, has a big impact on system outputs, the products. Therefore, selecting the optimal feedstock really depends on what products you’re trying to produce. 

If your priority is high biochar yield, denser materials like hardwoods, nut shells, and fruit pits are ideal. These can offer yield rates of 20 to 30 percent. On the other hand, if your project focuses on energy production or waste reduction, less dense materials like sugarcane bagasse, grasses, or agricultural residues may be more appropriate. For more insight into these differences, we recommend the following article: 

What a Good Feedstock Agreement Looks Like 

Investors want to see that your project has a secure and predictable supply chain. While it may not always be possible to sign a long-term contract from day one, even a one-year Letter of Intent (LOI) goes a long way in establishing credibility and project viability. 

A strong feedstock agreement should cover the basics: 

Example: The term of this Agreement shall commence upon the Effective Date and, unless earlier terminated pursuant the terms herein, shall remain in full force and effect for 20 years 

Example: Either Party may terminate this Agreement upon written notice if the other Party becomes insolvent, makes an assignment for the benefit of its creditors, has a receiver or trustee appointed for the benefit of its creditors, or files for protection from creditors under any bankruptcy or insolvency laws, 

Example: Payment shall be Net 15 Days from Shipment Date. Interest on delinquent amounts shall accrue at the rate of eighteen percent (18%) per annum until paid. 

And, more importantly, it should mitigate the following risks: 

Clarity and transparency here not only reduce risk but can streamline operations once you’re up and running. You can access our template documents 

Plan for Growth and Choose Partners Who Can Grow with You 

Most successful projects start small, then scale once the model proves itself. Your initial phase might require 10,000 to 20,000 tonnes of feedstock per year, but if the project performs well, you might need three or four times that in phase two. That’s why it’s worth prioritizing providers who can grow with you, or who are already managing large streams of waste that can be tapped gradually. 

Feedstock security isn’t static. It’s strategic. Think about where you want your project to go in five, ten, or twenty years, and choose partners who can help get you there. 

Feedstock is the foundation of your project and one of the first thing investors and registries will look at when assessing your business case. By understanding what makes feedstock viable, finding the right providers, and building clear agreements from the start, you’ll be positioned to scale smoothly and deliver impact. 

Discover strategies for securing reliable feedstock partnerships that meet sustainability and project growth goals. 

<p></p><p>Securing a consistent and high-quality feedstock supply is one of the most critical aspects of launching a successful biochar project. Here’s how to assess your feedstock options, approach providers, and build agreements that set your project up for scale. </p><p>Some projects already have secured feedstock, like a sugar mill looking for solutions to manage its excess bagasse. Others, however, need to form partnerships with external suppliers. We’ll focus on the specifics of this latter approach. </p><h2>What Makes a Feedstock Qualified? </h2><p>Before starting your project or reaching out to potential providers, you’ll need to understand what qualifies as acceptable feedstock. In short: it must be biogenic, waste-derived, and clean. That means it needs to come from a biological source, be considered a residual material rather than a primary product, and be free from contaminants like plastic, chemicals, or paint. </p><p>These standards aren’t just technicalities: they’re essential for emissions control, regulatory compliance, and downstream carbon certification. </p><p>In these previous articles you can read about eligible feedstocks for each Standard and how to prove its Sustainable: </p><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/67362abaea63cff8e65976e2" target="_blank" rel="noopener noreferrer"><em>Biochar: Feedstock Sourcing & Eligibility for every Standard </em></a></li></ul><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/68af5254b1d72ab2d7467ef7" target="_blank" rel="noopener noreferrer"><em>Securing Your Feedstock: How to Prove it’s Sustainable </em></a><em>(Members only)</em></li></ul><h2>Where to Find Viable Feedstock Providers </h2><p>The most reliable feedstock often comes from existing, large-scale operations that already generate biogenic waste as a byproduct of their core business. Sawmills, sugar mills, municipal green waste programs, and tree services are prime examples. They produce a steady stream of materials —like wood chips, bark fines, and bagasse— that would otherwise be discarded or underutilized. </p><p>Tapping into these supply chains allows you to leverage their existing logistics infrastructure. Ideally, your processing facility should be located as close as possible to theirs. This not only reduces transport costs, emissions and complexity, but makes your value proposition stronger, because you’re offering a solution for their waste, without requiring them to reinvent operations. </p><h2>Match Your Feedstock to Your Outputs </h2><p>Not surprisingly, feedstock composition, the biochar system input, has a big impact on system outputs, the products. Therefore, selecting the optimal feedstock really depends on what products you’re trying to produce. </p><p>If your priority is high biochar yield, denser materials like hardwoods, nut shells, and fruit pits are ideal. These can offer yield rates of 20 to 30 percent. On the other hand, if your project focuses on energy production or waste reduction, less dense materials like sugarcane bagasse, grasses, or agricultural residues may be more appropriate. For more insight into these differences, we recommend the following article: </p><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/6814f3dae44bb4f2fc862292" target="_blank" rel="noopener noreferrer"><em>How to Understand Your Biochar Quality</em></a><em> (Members only)</em></li></ul><h2>What a Good Feedstock Agreement Looks Like </h2><p>Investors want to see that your project has a secure and predictable supply chain. While it may not always be possible to sign a long-term contract from day one, even a one-year Letter of Intent (LOI) goes a long way in establishing credibility and project viability. </p><p>A strong feedstock agreement should cover the basics: </p><h3>Define the term of the agreement  </h3><p>Example: The term of this Agreement shall commence upon the Effective Date and, unless earlier terminated pursuant the terms herein, shall remain in full force and effect for 20 years </p><h3>Define the Termination rights </h3><p>Example: Either Party may terminate this Agreement upon written notice if the other Party becomes insolvent, makes an assignment for the benefit of its creditors, has a receiver or trustee appointed for the benefit of its creditors, or files for protection from creditors under any bankruptcy or insolvency laws, </p><h3>Define Payment Terms </h3><p>Example: Payment shall be Net 15 Days from Shipment Date. Interest on delinquent amounts shall accrue at the rate of eighteen percent (18%) per annum until paid. </p><p>And, more importantly, it should mitigate the following risks: </p><ul class="bullet"><li value=1>Feedstock quantities align with planned volumes </li></ul><ul class="bullet"><li value=1>Feedstock composition aligns with system design </li></ul><ul class="bullet"><li value=1>Feedstock cost aligns with financial projections </li></ul><ul class="bullet"><li value=1>Feedstock is eligible for carbon offsets. </li></ul><p>Clarity and transparency here not only reduce risk but can streamline operations once you’re up and running. You can access our template documents <a href="https://grainecosystem.com/knowledge-hub/downloads" target="_blank" rel="noopener noreferrer">here</a> to help you get started <em>(Members only)</em>. </p><h2>Plan for Growth and Choose Partners Who Can Grow with You </h2><p>Most successful projects start small, then scale once the model proves itself. Your initial phase might require 10,000 to 20,000 tonnes of feedstock per year, but if the project performs well, you might need three or four times that in phase two. That’s why it’s worth prioritizing providers who can grow with you, or who are already managing large streams of waste that can be tapped gradually. </p><p>Feedstock security isn’t static. It’s strategic. Think about where you want your project to go in five, ten, or twenty years, and choose partners who can help get you there. </p><h2>In Closing </h2><p>Feedstock is the foundation of your project and one of the first thing investors and registries will look at when assessing your business case. By understanding what makes feedstock viable, finding the right providers, and building clear agreements from the start, you’ll be positioned to scale smoothly and deliver impact. </p><h2>Related content </h2><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/67362abaea63cff8e65976e2" target="_blank" rel="noopener noreferrer">Biochar: Feedstock Sourcing & Eligibility for every Standard </a></li></ul><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/68af5254b1d72ab2d7467ef7" target="_blank" rel="noopener noreferrer">Securing Your Feedstock: How to Prove it’s Sustainable </a><em>(Members only)</em></li></ul><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/6814f3dae44bb4f2fc862292" target="_blank" rel="noopener noreferrer">How to Understand Your Biochar Quality</a> <em>(Members only)</em></li></ul><p> </p>

Finding and Partnering with the Right Feedstock Providers 

With the passage of the Inflation Reduction Act in 2022, federal tax credits for clean energy and climate change initiatives were introduced and expanded. Tax credits are financial incentives provided by the U.S. government to encourage specific activities, such as investment in affordable housing or renewable energy. These incentives help reduce the overall tax liability for businesses, making it financially viable to purse projects that align with the government’s priorities. 

The Inflation Reduction Act (IRA) specifically focuses on two types of tax credits: Investment Tax Credits (ITCs) and Production Tax Credits (PTCs). An ITC provides a percentage of the investment cost for renewable energy projects, energy storage systems, and other emerging technologies. Alternatively, PTCs offer a per-kilowatt-hour incentive for electricity generated from eligible technologies. Developers can opt for either an ITC or a PTC depending on their preference. 

Project developers that qualify for tax credits may use them to reduce their own tax liability or transfer them to a buyer for cash. This allows developers to finance their projects with more flexibility and encourages more investment in clean energy projects.  

Unlike tax deductions, which lower taxable income, tax credits provide a dollar-for-dollar reduction in the amount of taxes owed. This financial relief enables developers to allocate more resources towards their projects. 

A key provision of the IRA is the concept of “transferability”, allowing companies to transfer or sell tax credits to other corporations for cash. Traditionally, tax credits could only by used by the entity that owns the eligible asset. Now, if a developer lacks sufficient tax liability to use all their credits, they can sell them to another company or private buyer. The transfer market is still evolving, but pricing at time of writing ranges from $0.88 to $0.97 on the dollar (per credit). Pricing will vary based on the type of credit, its structure, and associated risks. This option provides immediate liquidity, lowering the barriers to market entry. 

Prior to the IRA, tax equity partnership structures were a common way to finance clean technology projects. Through this structure, investors – often large financial institutions – provide capital to these assets, in return receiving a significant portion of the project’s tax benefits, including both tax credits and depreciation benefits. With the introduction of tax credit transferability, developers can monetize tax benefits without forming a complex partnership structure. This also benefits small developers, who historically have had very limited access to capital. 

Increasingly, many tax equity partnerships are now permitting developers to sell transferable tax credits (but not depreciation) to a third party. Tax credits sold out of tax equity partnerships made up about 29% of the overall tax credit market in 2024. 

Tax credits are available to support investment and manufacturing efforts aimed at building the U.S. clean energy economy. There are various technologies that qualify. At Grain, we focus on biochar and waste-to-energy projects, but other examples include renewable energy, energy storage, and advanced manufacturing technologies.  

Some biochar projects may be eligible for Section 45Y and Section 48E tax credits, which are designed for technology-neutral clean electricity projects. If a facility is generating electricity through biogas or waste energy recovery and demonstrates net-zero greenhouse gas emissions, the developer may be able to file with the Internal Revenue Service (IRS) to claim credits. 

Section 48E is an ITC with a base value of 6% of eligible construction costs incurred by the taxpayer for projects with an output of 1MW or greater. For projects less than 1MW, the base value is 30%. To receive additional value, developers must meet the following standards:  

Section 45Y is a PTC that offers a tax credit for each kilowatt-hour of electricity generated and sold to a third party. The credit is earned over a 10-year period at $0.003/kWh (adjusted for inflation), or $0.0105/kWh for facilities that meet prevailing wage and apprenticeship standards. Section 45Y credits are also eligible for the domestic content and low-income community bonuses. 

Developers may opt for either 45Y or 48E – if a clean electricity project is not selling their generated electricity, they are only eligible for Section 48E.  

Selling tax credits can be a strategic way for developers to monetize their projects and generate cash flow. After determining which tax credits a project qualifies for, developers should gather necessary documentation to prove eligibility and value of the tax credits. The deadline to sell tax credits is at least until year end for the year the seller becomes entitled to a tax credit, and the buyer claims the tax credits in its tax year that ends on the same date as the seller’s tax year. 

If a developer is interested in selling their tax credits to another corporate, there is significant diligence required for transaction deals. It is important to consider the different risks: 

The tax credit market is rapidly growing in the U.S. and it is currently a seller’s market. A survey from Crux, a leading digital marketplace for IRA tax credits, found that more than 25 billion dollars of transferable tax credit deals were done in 2024. Pricing averaged $0.925 for ITC deals and $0.95 for PTC deals. Typically, larger deals come at a higher price. 

Digital marketplaces like Crux as well as advisory firms like Schneider Electric often connect corporate buyers to developers. Most marketplaces and consultants will charge a transaction fee, paid by the seller. It is also possible to find a buyer and transact independently, though this may require additional expertise on both sides of the deal. 

Understanding the types of tax credits available and their transferability can help developers of all sizes to raise funds for their clean technology projects. 

Learn what tax credits are, their role in the capital stack, the criteria for qualifying as a biochar project in the United States of America, and the process to sell them.

<p></p><p>With the passage of the Inflation Reduction Act in 2022, federal tax credits for clean energy and climate change initiatives were introduced and expanded. Tax credits are financial incentives provided by the U.S. government to encourage specific activities, such as investment in affordable housing or renewable energy. These incentives help reduce the overall tax liability for businesses, making it financially viable to purse projects that align with the government’s priorities. </p><p>The Inflation Reduction Act (IRA) specifically focuses on two types of tax credits: Investment Tax Credits (ITCs) and Production Tax Credits (PTCs). An ITC provides a percentage of the investment cost for renewable energy projects, energy storage systems, and other emerging technologies. Alternatively, PTCs offer a per-kilowatt-hour incentive for electricity generated from eligible technologies. Developers can opt for either an ITC or a PTC depending on their preference. </p><h2>How developers use tax credits </h2><p>Project developers that qualify for tax credits may use them to reduce their own tax liability or transfer them to a buyer for cash. This allows developers to finance their projects with more flexibility and encourages more investment in clean energy projects.  </p><h3>Reducing Tax Liability </h3><p>Unlike tax deductions, which lower taxable income, tax credits provide a dollar-for-dollar reduction in the amount of taxes owed. This financial relief enables developers to allocate more resources towards their projects. </p><h3>Leveraging Transferability </h3><p>A key provision of the IRA is the concept of “transferability”, allowing companies to transfer or sell tax credits to other corporations for cash. Traditionally, tax credits could only by used by the entity that owns the eligible asset. Now, if a developer lacks sufficient tax liability to use all their credits, they can sell them to another company or private buyer. The transfer market is still evolving, but pricing at time of writing ranges from $0.88 to $0.97 on the dollar (per credit). Pricing will vary based on the type of credit, its structure, and associated risks. This option provides immediate liquidity, lowering the barriers to market entry. </p><h3>Hybrid Structures: Tax Equity Options </h3><p>Prior to the IRA, tax equity partnership structures were a common way to finance clean technology projects. Through this structure, investors – often large financial institutions – provide capital to these assets, in return receiving a significant portion of the project’s tax benefits, including both tax credits and depreciation benefits. With the introduction of tax credit transferability, developers can monetize tax benefits without forming a complex partnership structure. This also benefits small developers, who historically have had very limited access to capital. </p><p>Increasingly, many tax equity partnerships are now permitting developers to sell transferable tax credits (but not depreciation) to a third party. Tax credits sold out of tax equity partnerships made up about 29% of the overall tax credit market in 2024. </p><h2>How to qualify for tax credits </h2><p>Tax credits are available to support investment and manufacturing efforts aimed at building the U.S. clean energy economy. There are various technologies that qualify. At Grain, we focus on biochar and waste-to-energy projects, but other examples include renewable energy, energy storage, and advanced manufacturing technologies.  </p><p>Some biochar projects may be eligible for Section 45Y and Section 48E tax credits, which are designed for technology-neutral clean electricity projects. If a facility is generating electricity through biogas or waste energy recovery and demonstrates net-zero greenhouse gas emissions, the developer may be able to file with the Internal Revenue Service (IRS) to claim credits. </p><p>Section 48E is an ITC with a base value of 6% of eligible construction costs incurred by the taxpayer for projects with an output of 1MW or greater. For projects less than 1MW, the base value is 30%. To receive additional value, developers must meet the following standards:  </p><ul class="bullet"><li value=1><strong>Prevailing Wage and Apprenticeship Requirement (Base Value: 30%)</strong> – Laborers and mechanics employed by the developer must be paid no less than applicable prevailing wage rates. Facilities are also required to employ apprentices for a certain number of hours, varying by location and the number of people they employ. <a href="https://www.dol.gov/general/inflation-reduction-act-tax-credit" target="_blank" rel="noopener noreferrer">You can find more information about prevailing wage and apprenticeship requirements here.</a> </li></ul><ul class="bullet"><li value=1><strong>Domestic Content Bonus Credit (2-10%) </strong>– All structural steel or iron products used must be produced in the U.S. and a threshold percentage of the total costs of manufactured products of the facility need to be mined, produced, or manufactured in the U.S. </li></ul><ul class="bullet"><li value=1><strong>Energy Communities Bonus Credit (2-10%) </strong>– Project must be in an eligible energy community. Energy communities are: (1) Brownfield sites; (2) areas with past fossil fuel related employment or revenue; and (3) census tracts that have experienced the closure of a coal mine or coal-fired power plant in recent years. <a href="https://arcgis.netl.doe.gov/portal/apps/experiencebuilder/experience/?id=a2ce47d4721a477a8701bd0e08495e1d" target="_blank" rel="noopener noreferrer">You can find more information about energy communities here. </a></li></ul><ul class="bullet"><li value=1><strong>Low-Income Communities Bonus Credit (10-20%) </strong>– Project must be in a low-income community, on Indigenous land, or part of an affordable housing development. Developers must separately apply through the Department of Energy before operations begin. <a href="https://eco.energy.gov/licbonus/s/" target="_blank" rel="noopener noreferrer">You can find more information about the Low-Income Communities Bonus Credit Program here.</a> </li></ul><p>Section 45Y is a PTC that offers a tax credit for each kilowatt-hour of electricity generated and sold to a third party. The credit is earned over a 10-year period at $0.003/kWh (adjusted for inflation), or $0.0105/kWh for facilities that meet prevailing wage and apprenticeship standards. Section 45Y credits are also eligible for the domestic content and low-income community bonuses. </p><p>Developers may opt for either 45Y or 48E – if a clean electricity project is not selling their generated electricity, they are only eligible for Section 48E.  </p><h2>How to sell tax credits </h2><p>Selling tax credits can be a strategic way for developers to monetize their projects and generate cash flow. After determining which tax credits a project qualifies for, developers should gather necessary documentation to prove eligibility and value of the tax credits. The deadline to sell tax credits is at least until year end for the year the seller becomes entitled to a tax credit, and the buyer claims the tax credits in its tax year that ends on the same date as the seller’s tax year. </p><h3>Risks to Consider </h3><p>If a developer is interested in selling their tax credits to another corporate, there is significant diligence required for transaction deals. It is important to consider the different risks: </p><ul class="bullet"><li value=1><strong>Qualification Risk </strong>- A portion of the credits transferred are deemed not eligible by the IRS. Ensure that all information submitted to the IRS is accurate and there is evidence to confirm base and bonus credit values. </li></ul><ul class="bullet"><li value=1><strong>Recapture Risk </strong>– There is a 5-year recapture risk on ITCs. As a result, most deals will require proof of ownership, sponsor financials (i.e. evidence of insurance, lender forbearance agreements, financial projections), and operating agreements. </li></ul><ul class="bullet"><li value=1><strong>Execution Risk</strong> - The project does not place in service in the agreed upon tax year. Documentation of an independent engineer report, site control agreement, or any other relevant studies may be necessary. </li></ul><h3>Finding a Buyer </h3><p>The tax credit market is rapidly growing in the U.S. and it is currently a seller’s market. A survey from Crux, a leading digital marketplace for IRA tax credits, found that more than 25 billion dollars of transferable tax credit deals were done in 2024. Pricing averaged $0.925 for ITC deals and $0.95 for PTC deals. Typically, larger deals come at a higher price. </p><p>Digital marketplaces like Crux as well as advisory firms like Schneider Electric often connect corporate buyers to developers. Most marketplaces and consultants will charge a transaction fee, paid by the seller. It is also possible to find a buyer and transact independently, though this may require additional expertise on both sides of the deal. </p><p>Understanding the types of tax credits available and their transferability can help developers of all sizes to raise funds for their clean technology projects. </p><h2>Sources </h2><ul class="bullet"><li value=1><a href="https://www.cruxclimate.com/insights/tech-neutral-tax-credits-48e-45y" target="_blank" rel="noopener noreferrer">Crux Climate</a> </li><li value=2><a href="https://www.irs.gov/instructions/i3468#en_US_2024_publink1000139682" target="_blank" rel="noopener noreferrer">Internal Revenue Service</a> </li><li value=3><a href="https://www.projectfinance.law/publications/2023/june/irs-transferability-guidance/" target="_blank" rel="noopener noreferrer">Norton Rose Fulbright</a> </li><li value=4><a href="https://www.bakertilly.com/insights/final-regulations-released-section-45y-48e" target="_blank" rel="noopener noreferrer">Baker Tilly</a> </li></ul>

What Are Tax Credits? 

The recording of our recent webinar, The Green Bridge: Non-Traditional Finance for Biochar, is now available. If you’re interested in how innovative funding models can unlock climate impact —especially for early-stage biochar projects— this is a conversation worth watching. 

In this session, Jason Dodier (CCO of Grain Ecosystem) and Adam Fraser (CEO of Terraset) examined what it takes to fund early-stage carbon removal projects that don’t yet fit neatly into traditional private markets. Biochar is a strong example: a proven carbon removal pathway that still struggles with access to capital in its early phases. 

The conversation began with a challenge: many high-potential projects remain stuck in what’s often called the “valley of death”, a period between early concept and full deployment where access to capital is limited, timelines are long, and risks are high. In this gap, philanthropy can play a catalytic role. 

Adam explained how Terraset addresses this by using philanthropic capital to pre-purchase future carbon removal. This means they act not as a grant-maker, but as an early customer, providing revenue to projects before credits are issued. By doing this, Terraset helps build trust, signal credibility, and unlock follow-on investment. 

The model rests on rigorous standards: projects must demonstrate additionality, durability, and verifiability. For those that do, a pre-purchase can make the difference between a stalled pilot and a scalable carbon solution. The webinar included real-world examples of this approach, including a biochar project in sub-Saharan Africa that uses invasive species as feedstock while also contributing to affordable housing and local employment. 

Jason and Adam also discussed the limits of philanthropy: it won’t replace private markets or policy, but it can help activate both. Especially for rural and forestry-based economies, flexible early funding can make space for collaboration across funders, developers, and communities, and help lower the barriers to entry for those without traditional financing backgrounds. 

For participants curious about next steps, Jason shared how the Grain Project Roadmap can help prospective developers understand what’s needed to move from idea to investable concept: mapping feedstocks, estimating potential carbon removal, and aligning with standards. It’s a tool designed to reduce the friction between project ambition and project readiness. 

As Jason put it during the session: “We don’t build the building for you, but we make sure you don’t do it alone.” 

Already have an account on our platform? You can jump right into the new Project Roadmap and start a project there. If you’ve previously started a project using the old format, you’ll have the option to migrate it into the new structure, making it easier to follow each step. And if you're new to Grain, you can create a free account and get started in just a few minutes. 

Webinar recap with Adam Fraser (Terraset) and Jason Dodier (Grain Ecosystem). 

<p></p><p>The recording of our recent webinar, The Green Bridge: Non-Traditional Finance for Biochar, is now available. If you’re interested in how innovative funding models can unlock climate impact —especially for early-stage biochar projects— this is a conversation worth watching. </p><p><code><iframe width="1246" height="701" src="https://www.youtube.com/embed/hzzPAN_oczg" title="The Green Bridge: Non-Traditional Finance for Biochar | With Adam Fraser and Jason Dodier" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe></code></p><p><a href="https://youtu.be/hzzPAN_oczg" target="_blank" rel="noopener noreferrer"><em>Click here to watch the full recording on YouTube</em></a><em> </em></p><p>In this session, Jason Dodier (CCO of Grain Ecosystem) and Adam Fraser (CEO of Terraset) examined what it takes to fund early-stage carbon removal projects that don’t yet fit neatly into traditional private markets. Biochar is a strong example: a proven carbon removal pathway that still struggles with access to capital in its early phases. </p><p>The conversation began with a challenge: many high-potential projects remain stuck in what’s often called the “valley of death”, a period between early concept and full deployment where access to capital is limited, timelines are long, and risks are high. In this gap, philanthropy can play a catalytic role. </p><p>Adam explained how Terraset addresses this by using philanthropic capital to pre-purchase future carbon removal. This means they act not as a grant-maker, but as an early customer, providing revenue to projects before credits are issued. By doing this, Terraset helps build trust, signal credibility, and unlock follow-on investment. </p><p>The model rests on rigorous standards: projects must demonstrate additionality, durability, and verifiability. For those that do, a pre-purchase can make the difference between a stalled pilot and a scalable carbon solution. The webinar included real-world examples of this approach, including a biochar project in sub-Saharan Africa that uses invasive species as feedstock while also contributing to affordable housing and local employment. </p><p>Jason and Adam also discussed the limits of philanthropy: it won’t replace private markets or policy, but it can help activate both. Especially for rural and forestry-based economies, flexible early funding can make space for collaboration across funders, developers, and communities, and help lower the barriers to entry for those without traditional financing backgrounds. </p><p>For participants curious about next steps, Jason shared how the Grain Project Roadmap can help prospective developers understand what’s needed to move from idea to investable concept: mapping feedstocks, estimating potential carbon removal, and aligning with standards. It’s a tool designed to reduce the friction between project ambition and project readiness. </p><p>As Jason put it during the session: “We don’t build the building for you, but we make sure you don’t do it alone.” </p><p>Already have an account on our platform? You can jump right into the new Project Roadmap and start a project there. If you’ve previously started a project using the old format, you’ll have the option to migrate it into the new structure, making it easier to follow each step. And if you're new to Grain, you can create a free account and get started in just a few minutes. </p><h3>Related content:  </h3><ul class="bullet"><li value=1><a href="https://grainecosystem.com/knowledge-hub/articles/687557f75e36c0dbe6ba06ce" target="_blank" rel="noopener noreferrer">Grain Ecosystem and Terraset Partner to Accelerate Biochar Carbon Removal with 1,000 Tonnes Pre-Purchased from Pyrogen</a> </li><li value=2><a href="https://grainecosystem.com/knowledge-hub/articles/67b75ae223e6759660f119ad" target="_blank" rel="noopener noreferrer">Advancing CDR: From Start-Up to Scale-Up</a></li><li value=3><a href="https://grainecosystem.com/knowledge-hub/articles/6751f73e593a512d338ee036" target="_blank" rel="noopener noreferrer">Building Biochar Markets for Value & Scale: Webinar Recap</a></li><li value=4><a href="https://grainecosystem.com/knowledge-hub/articles/67092f5e79685344119a953f" target="_blank" rel="noopener noreferrer">Dirt to Dollars. Unearthing the Science of Sustainable Investment</a></li></ul>

Articles

Biochar in Bloom: Lessons from Okaw Valley Orchard

Finding and Partnering with the Right Feedstock Providers

What Are Tax Credits?

The Green Bridge: Non-Traditional Finance for Biochar